Alibaba integrates two core services

Date : 16 December 2019

The ecommerce giant integrates its local service platforms, Koubei and Ele.me, with its group-buying platform Juhuasuan.

Brings digitally upgraded local services to Juhuasan

Part of the life-style services offered on local services platform Koubei and Ele.me, including Pizza Hut, McDonald’s, KFC, and other services like photo shooting and body care, are now available on Juhuasan, a group buying platform.

Koubei and Ele.me developed digital coupon capability this year, allowing local service providers to offer promotions including multibuy, “buy one get one free” and “50% off” for the first time.

 “Strategically connected and integrated

The integration allows Koubei and Ele.me to gain an additional sales channel through Juhuasan to compete with Meituan.

Although an ecommerce dominant player, Alibaba is relatively weaker in local services compared with Tencent-backed Meituan, the largest local service provider in China. Alibaba’s quarterly revenue generated from local consumer services is around CNY6.8bn. Meituan’s quarterly food delivery business revenue is more than twice of that.

Through the integration, Juhuasan will also benefit from enriched offering, making it more differentiated in the market. It is no longer a platform only for physical goods, but also a platform that offers service-type goods such as catering, leisure and entertainment.

This means that in Alibaba’s digital economy, the two existing consumer services core business, Koubei and Ele.me, will be strategically connected and integrated with Juhuasuan,” according to an unidentified executive at Alibaba’s local consumer services segment.

Our view

Alibaba’s this move will accelerate the process of digitisation that is quietly happening in local services in China.

Compared with its ecommerce market, the degree of digitisation in local services is about five years behind. The integration of Koubei, Ele.me and Juhusan makes the digitisation process simpler and reduces the threshold of digital marketing for the local service providers.

The combination of New Retail and New Service will be Alibaba’s main focus in the next stage.

 

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